Improving the Personal Data Markets for Everyone through Transparency

This is the second of a three part series respectively covering the current state of the data broker industry, the threat it poses to national security, and a novel proposal for resolving these issues while maintaining or increasing profitability for data brokers.


Despite the huge risks posed by the current lack of transparency and oversight of the personal broker industry, reform has been glacial to non-existent. As previously discussed, U.S. legislators use data brokers’ information to target their political campaigns despite general U.S. discomfort with such practices. Reforms are possible, however, if they can be done without threatening data broker profits—and the proposal here is intended to enhance them while also safeguarding against some of the industry’s excesses by creating publicly transparent markets for the exchange of data.

Reforms improving transparency in both electoral processes and data brokers have proven successful in the past, so it’s certainly possible Over the course of the 1970’s federal regulations were put into place requiring elected officials to disclose all campaign contributions. In 2003 with the FACT Act, credit bureaus were required to at least once per year give consumers access to their credit reports.

Public outrage over the industry’s excesses could kindle the drive over such reforms. In addition to the issues already discussed, there are a few incidents and concerns that play to partisan issues. Liberals might be concerned over anti-abortion groups using phone location tracking to send women mobile ads as they enter Planned Parenthood clinics, or that the government could bypass intelligence agency objections to obtain a lists of every Muslim in the U.S. for under $20,000 from several different brokers. Conservatives could realize that lists like these also list their own religions, political affiliations, gun ownership, etc., or how terrorist groups like ISIS could use these data to more efficiently target recruitment or attacks.

But the motive for reform matters little without a workable alternative to the status quo. So, I propose bringing the transactions of brokers into the light by establishing markets for the bulk exchange of data, inspired by the likes of commodities markets, Amazon, and Alibaba, but in which all transactions are matters of public record. On this market groups could buy access, rights, storage, analysis, etc. of such data.

From a security perspective, this would make it considerably easier for U.S. intelligence and security agencies to protect U.S. citizens’ information. Buyers and sellers on the market would be subject to regular federal certification to ensure general compliance with security practices and being a legitimate user for the data (keeping the data out of the hands of criminals, terrorists, and potentially hostile foreign governments), with the degree of scrutiny scaled based on the quantity and sensitivity of the information. By providing an index of which groups had access to which data security forces could better identify sources of leaks, which is currently nearly impossible. Additionally, brokers could easily outsource the actual storage of their data to specialized, highly secure firms rather than leaving redundant copies in their own systems, meaning that hackers need only seek out the weakest defended of many possible targets to breach.

For consumer advocates it means that watchdog groups can get a solid handle on these transactions, quickly flagging any particularly worrisome incidents, so that the worst of the industry can be tidied up without hindering more benign exchanges.

The data brokers might initially seem to risk a lot in this shift: opening themselves and their clients to public scrutiny plus compliance expenses. However, it also opens several new ways to enhance their own profitability.

First it streamlines and unifies the market, reducing transaction costs. Second, it could facilitate standardization of data formats, revolutionizing data exchanges in the same way that standardized shipping crates revolutionized global trade. Third, it gives all data purchasers direct access to the history and provenance of data in order to better assess its reliability and appropriateness for their uses. Fourth, it could open the brokers up to new sources of clients. University researchers in particular spring to mind here as one could see them purchasing access to the data through their institution (which would act as the screened intermediary and would actually retain control of the data for security and IRB compliance purposes), but private sector groups could also find it easier to navigate a transparent market for data than the current disorganized and opaque one. Fifth, the overall transparency in the market would make it far easier to identify underserved niches in data collection and analysis, highlighting new opportunities for revenue.

With the interests of brokers, legislators, and the public aligned, we can all reap the benefits of the Age of Omniscience while keeping an eye on the watchmen.

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